Entegris, Inc.

Good day, everyone, and welcome to the Integris Q2 2022 earnings release call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Bill Seymour, VP of Investor Relations. Please go ahead, sir.

Good morning, everyone. Earlier today, we announced the financial results for our second quarter of 2022. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in our most recent annual report and subsequent quarterly reports that we have filed with the SEC. Please refer to the information on the disclaimer slide in the presentation. On this call, We will also refer to non-GAAP financial measures as defined by the SEC in Regulation G. You will find a reconciliation table in today's news release, as well as on our IR page of our website at integris.com. On the call today are Bertrand Lois, our CEO, and Greg Graves, our CFO. Before I hand over to Bertrand, there is a few items I'd like to mention related to the CMC acquisition. First, because of the timing of the close of the transaction, Our second quarter results that we reported today include only legacy Integris Q2 results and do not include CMC materials results. However, to help provide some context, Bertrand will make some brief comments on CMC materials fiscal third quarter sales. And because of the timing of the closes, I'm sure you can understand we are providing only sales and EBITDA guidance for the third quarter and the full year 2022 for the combined company. To assist in your modeling, we will also be providing pro forma recast historical financials on a consolidated basis and for the four divisions before the analyst meeting. On that note, you should have seen the save the date for our virtual investor and analyst meeting on September 22nd, where we will provide an update and additional details on the CMCA materials integration and the overall financial outlook for the combined platform. With that, I'll hand the call over to Bertrand.

Thank you, Bill, and good morning to all. Before I get started, I want to say how excited we are to welcome our new colleagues from CMC Materials to the Integris team. Now let's turn to our results. During the second quarter, sales growth and our operational execution were once again very strong. However, foreign exchange had a meaningfully negative impact on our bottom line performance. For the quarter, Sales were up 21% year-on-year. Growth was significant across all three divisions, driven by continued strong demand for our products and solutions and great execution by our supply chain teams. EBITDA margins were 30%. Non-GAAP EPS was $1 for the quarter, slightly below our guidance range. excluding the negative impact of foreign exchange, our EPS would have been approximately 15 cents higher in the second quarter. Greg will provide more color on the foreign exchange impact shortly. Let me make a few additional comments on our second quarter sales performance. In the quarter, we continued to benefit from a strong industry environment with robust FAB activity and elevated levels of capex in the semiconductor industry. In particular, we saw strong activity at the advanced nodes, where we enjoy greater integrity content per wafer. This led to our significant market outperformance during the quarter. Growth was particularly strong in several unit-driven product lines of increasing strategic importance to our customers, including liquid filtration, advanced deposition materials, and selective edge chemistries, which in the aggregate were up 24% year-to-date. Growth was also very strong in CAPEX-driven products related to new fab construction projects, including fluid handling, FOOPS, and gas filtration and purification products, which in the aggregate grew over 40% year-to-date. Moving on to some very high-level comments on sales results for CMC Materials' third fiscal quarter. Excluding revenue from the exited wood treatment business, total revenue for CMC Materials was up approximately 11% year-on-year and up 3% sequentially in the quarter. In particular, slurry's revenue increased 15% year-on-year, and PAD's revenue was up 10%. We are very excited about our combination with CMC Materials, and the promise of the combination has also been validated in our discussions with customers post-close. They see the value in our end-to-end suite of process solutions and the positive impact this will have on device performance and development times. In connection with the completion of the transaction, Integris has established a new operating model, including adding a fourth division, Advanced Plannerization Solutions, and we have expanded our executive leadership team. The integration plans that we have been developing diligently since Q1 are now being executed. We have already communicated the detailed organizational structure internally and everyone impacted by our integration plans has been notified. As a management team and as an organization, our focus going forward will be on rapidly and effectively completing the integration of CMC materials, driving revenue and cost synergies, and paying down the debt. As it specifically pertains to post-close portfolio decisions, we have spent a great deal of time analyzing the various parts of CMC's portfolio of businesses to assess their respective long-term strategic fit to the combined platform, including identifying potential candidates for sale. We remain focused on this and will update you at the appropriate time. We also look forward to discussing in greater detail our integration plans for CMC and our growth strategy for the combined company in our upcoming analyst meeting on September 22nd. Now, transitioning to our outlook for the full year, the legacy integrates business is tracking in line with our previous expectations for 2022. driven by very strong demand for our products and solutions, and continued excellent execution by our supply chain teams. We also expect the positive momentum of the legacy CMC materials business will continue into the second half of the calendar year. Putting it all together on a pro forma basis, excluding CMC's wood treatment business, we expect revenue for the combined company to exceed $4 billion and grow in excess of 16% in calendar 2022. And we expect pro forma EBITDA of the combined company to be approximately 30% of revenue in calendar 2022. We continue to have a high degree of conviction in the positive secular growth dynamics of the semiconductor market. On top of this, Our customers' roadmaps are calling for both the introduction of more complex device architectures as well as further miniaturization of the critical dimensions on the wafer. This plays directly to Integris' strength because we operate at the crossroads of material science and materials purity. And these two core capabilities are quickly becoming some of the most critical enablers to the semiconductor technology roadmaps. And as we have laid out, these trends are leading to a rapidly expanding Integris content per wafer. With the addition of CMC's suite of solutions, Integris now offers the industry's most comprehensive electronic materials portfolio for applications in the fab environment and across the semiconductor ecosystem. With this combination, we are better positioned than ever to address our customers' most demanding process challenges and support their ambitious technology roadmaps while helping them achieve a faster time to solution. Wrapping it up, we are pleased with our strong growth year to date and our prospects for the rest of the year. Looking ahead, We will continue to be pragmatic, closely monitoring industry developments, and ready to make adjustments as needed. And with approximately 80% of our revenue now unit-driven, our platform should prove to be even more resilient, regardless of the macro environment. Finally, I want to take a moment to thank our customers for the trust and confidence they place in Integris And once again, thank our newly expanded, integrous teams around the world for their incredible focus and commitment. Now, let me turn the call to Greg. Greg?